Key facts
- Brazil's Supreme Court upheld state laws that deny tax incentives to farmers who complied with the Amazon soy moratorium.
- The court affirmed the constitutionality of the voluntary soy moratorium pact.
- Major soy traders withdrew from the moratorium in January after top soy-producing states revoked tax benefits for participants.
- The soy moratorium helped reduce deforestation in risk areas by 35% in its first decade.
- A study predicts the pact's end could lead to 1.4 million hectares of deforestation in the next decade.
Brazil's Supreme Court on Wednesday upheld state laws that revoke tax incentives for farmers adhering to the Amazon soy moratorium, a voluntary agreement that barred the purchase of soy grown on deforested land. While the court affirmed the constitutionality of the pact itself, the ruling effectively undermines its future by validating state legislation that penalizes companies for adopting environmental standards beyond legal requirements.
Major grain traders withdrew from the nearly two-decade-old moratorium in January after top soy-producing states passed bills revoking tax benefits for participating companies. Brazil is the world's largest soybean producer, with a significant portion of its crop grown in Amazonian states. The Amazon rainforest plays a critical role in regulating the global climate.
Soy producers had argued the moratorium was stricter than Brazilian environmental law, which requires farmers to preserve 80% of their land and allows clearing of the remaining 20%. The moratorium, launched in 2006, banned any deforestation, even when legally permitted.
A study published in the journal Science indicated that the moratorium reduced deforestation in risk areas by 35% in its first decade without harming productivity. The study warned that the pact's end could lead to 1.4 million hectares (3.5 million acres) of deforestation in the next decade.
Greenpeace Brazil legal coordinator Angela Barbarulo called the court's recognition of the moratorium's constitutionality "enormously important" but criticized the ruling for validating state laws that could weaken its effectiveness. The Brazilian Association of Vegetable Oil Industries (ABIOVE) stated the ruling ends legal uncertainty and validates voluntary sustainability commitments, but referred to the moratorium in the past tense, suggesting it is unlikely to be revived. The Mato Grosso Soy Producers Association, which opposed the moratorium, said the ruling reinforced state governments' authority to push back against private-sector environmental restrictions.